March corn was slightly higher late in the overnight session. Outside forces look slightly supportive this morning with a weaker US dollar and firm equity markets. The market saw a strong recovery yesterday, and traders indicated a variety of reasons for the gain. The USDA does not show China as a significant importer of corn for the coming year, so the news of their feed wheat purchases do not seem to suggest a reduced export potential for US corn. In addition, a strong recovery in weekly ethanol production, expectations for lower production from Argentina, expectations that this afternoon's Cattle on Feed report could show on-feed supply at 4% above last year and a slowdown in producer selling were all seen as potential supportive forces ahead. China plans to continue to offer state reserves at auctions next week but will also be buying corn from producers to rebuild state reserves. The Chinese government plans to offer 1.8 million tonnes of corn for auction on Tuesday. Some major corn processors there have been asked to halt purchases from the market for now and allow the government to build reserves. The government there has sold 26.26 million tonnes of corn from state reserves since April of last year. Argentine truck drivers and port workers near the main grain terminal at Rosario plan to go on strike next Wednesday to protest thier pay. This could disrupt to flow of corn on the world market from the world's second largest exporter. The Buenos Aires Grains Exchange pegged the 2010/11 corn crop at 19.5 million tonnes, which was down from last week's estimate of 20.35 million tonnes, due to recent poor weather during the key pollination phase. Some traders see the better weather ahead for Argentina as coming too late for the crop to fully recover. The 19.5 million tonne estimate is down 4 million tonnes from the recent USDA estimate. The corn market saw a strong recovery off of the lows yesterday to close sharply higher on the day, as buying emerged after a 38 3/4 cent break from Wednesday's highs to the early lows. Commercial and fund buying was noted. The market saw general commodity market liquidation due to China tightening fears after their December retail sales were up strong, and this helped spark aggressive selling. In addition, traders see improved weather in Argentina and the presence of cheaper feed wheat on the world market as reasons to suspect lower export demand for US corn. A state-owned China grain firm bought 150,000 tonnes of Australia feed wheat. The International Grain Council lowered their world corn production estimate for 2010/11 to 809 million tonnes, down 1 million from the previous forecast. Ethanol production for the week ending January 14 averaged 913 thousand barrels per day. This is up 2.82% from the previous week and up 11.6% from a year ago. Corn used in last week's production was estimated at 95.86 million bushels. Corn use needs to average 94.5 million bushels per week to meet this crop year's USDA estimate of 4.9 billion bushels. Traders see this morning's weekly export sales near 800,000 tonnes.